Monday, July 19, 2010

Vladimir Popov replies on China

I am very grateful to everyone who commented on my post of 24 May on the Uniqueness of Chinese Capitalism. Here are some brief replies that I hope might promote further debate.

Mario stresses the prohibition of trades unions and strikes in today’s China. Well, trade unions formally exist, but the right to strike is really not guaranteed by Deng’s constitution, although it was guaranteed by Mao’s constitution. (By the way, the relative popularity of Mao and Deng in China today could be measured by observing the numbers at the memorial site where people can go and put virtual flowers to personalities they like: http://jidian.china.com Since 2009 and until July 8, 2010, Mao got over 2 million bouquets of flowers, Deng – only 33,000, less than Zhou Enlai (nearly 200,000) and Norman Bethume, a Canadian doctor helping Republicans in Spain in 1936-39 and Communists in China during the Anti-Japanese and Civil Wars (over 37,000)).

Mario questions my statement that all developed countries had authoritarian regimes in the past. “Including England, Sweden, Denmark, Switzerland, the United States? If you said "many developed countries had before" nobody could argue, but all? You might say more about this presumably universal authoritarianism”. Well, I would stick to what I said – there was life before democracy, which emerged at a very late stage of human history. In ancient Greece neither women nor slaves had voting rights. In France in 1815-30 voters amounted to only 0.25-0.3 per cent of the population, and about 0.6 per cent in 1830-48. In England suffrage was extended by the Reform Act of 1832. Nevertheless, voting rights were received by 14-18 per cent of men only. Universal male suffrage was introduced only in 1928. In Germany, Italy, Belgium women were not given voting rights until after the Second World War. Rich countries were generally late in introduction of universal suffrage: it was granted in 1965 in the USA, in 1970 - in Canada, in 1971 - in Switzerland. (Polterovich, Popov, 2007).

Mario writes: “Mao's contribution to filling state coffers is fine, but did he really contribute to building state institutions? I thought Maoism had been fairly destructive rather than constructive in this respect?”

I referred to the fact that Mao created the “vertical of power” that not only Putin, but Qin Shihuangdi (the first emperor that unified China in 3rd century B.C.) could not have dreamt of. I gave the data on shadow economy and murders. I said that party cells were created in every village, so for the first time in China’s history the central government in Beijing could enforce decisions taken in the capital all across the country. And I explained that government for the first time in Chinese history started to collect reasonable revenues (always a problem in developing countries).

A couple of examples can be enlightening. In Mao’s days policemen used to be unarmed like most British Bobbies. Bank officials collected cash from retail shops at the end of the business day and carried it back to the bank on a bike or via public transport (and unarmed, of course). Today, the same procedure is different – armoured vehicles, bullet proof jackets, helmets, machine guns…

Another good indicator of the ability to maintain social order and the magnitude of non-compliance with existing regulations is the incarceration rate – the number of inmates per capita. It is 120 per 100,000 against 751 people in prison or jail for every 100,000 population in the US and 151 in the UK. Which is the “land of freedom” and which is the “prison state”?

Anonymous comments that the lower Chinese murder rate does not account for “capital punishment and the silent massacre of female babies along with the number of suicides directly or indirectly induced by Chinese state repression and rule of force”. It does account for capital punishment; Amnesty International estimates that “Legal murders” – executions (1000-2000 a year) account for about 5% of total murders.

“The silent massacre of female babies” is probably a reference to Berlusconi statement that “under Mao's China they didn't eat babies, but they boiled them to fertilise the fields” (Berlusconi, 2006). There is a debate, whether China has sex-selective abortions (although it is illegal for doctors in China to reveal the gender of the foetus) because China has one of the highest gender imbalances for the newborns. But “silent massacre of female babies” is as probable as “boiling them to fertilize the fields”.

And on “suicides directly or indirectly induced by Chinese state repression and rule of force”: the total number of suicides in China is 21 per 100,000, quite high by international standards, but less than in Japan and Finland, and way less than in Estonia and Hungary.

Alberto’s comment that “authoritarian types of mixed capitalist economy with an important steering role for the state have thrived in South-East Asia, from Japan to Singapore, to South Korea and Taiwan, without any communist connotations, leading those countries to development and prosperity” is missing the point. All the countries mentioned were supported by the US during the Cold War as counterweights to global communism, some even call this “development by invitation”. Not only did they receive Western assistance, but also, and most important, got access to US markets. In addition in Japan and Korea the agricultural reform was carried by the US occupation authorities and in Taiwan it took place under pressure from the US.

In a sense, Alberto writes, “over the long haul Chiang Kai-shek has triumphed over Mao. (An analogous consideration could be made with respect to Vietnam, where after a long bloody civil war the vanquished appear to have triumphed over the victors.)”. I would dispute that. Chiang Kai-shek, as the puppet South Vietnamese government, had the time to carry reforms and produce an economic miracle but failed to do so. There was no growth and no peace in China in 1928-48, when Chiang Kai-shek was the leader. When Chiang Kai-shek fled to Taiwan (even after the so called “golden decade of the 1930s”), he left China with GDP per capita of $500 (Maddison, 2008), same as in 1500, and a life expectancy of 35 years.

To put it differently, to produce an economic miracle in Taiwan Chang Kai-shek had to be defeated and learn from his defeat and from the communists (and to carry out agrarian reform on the island that he never carried out in China) and to get a support from the US (access to the US market).

“…Maoism left the Chinese economy and society in such a bad shape that simply the demolition of Maoism produced the economic miracle”, says Alberto. This is wrong again. The catch-up development of China since 1949 was extremely impressive: not only were growth rates in China higher than elsewhere after the reforms (1979 onward), but even before the reforms (1949-79), despite temporary declines during the Great Leap Forward and the Cultural Revolution, Chinese development was quite successful. According to Maddison (2008), Chinese per-capita GDP was about 70 percent of India’s in 1950, rose to about 100 percent by 1958-59, fell during the Great Leap Forward, rose again to 100 percent of the Indian level by 1966, fell during the first years of the Cultural Revolution, and rose again to 100 percent by 1978. By 2006, it was more than twice the Indian per capita GDP. World Bank estimates, however, suggest that since 1960, Chinese growth rates (five-year moving averages) were always higher than Indian growth rates. Life expectancy in China in 1950 was only 35 years but by the end of the 1970s rose to 65 years—thirteen years higher than in India. Today, it is seventy-three years—seven years higher than in Russia and India. Some charts below (from Popov, 2009).

“But the right to strike is really not guaranteed by Deng’s constitution, although it was guaranteed by Mao’s constitution “

But was Mao’s constitution (alike Stalin’s constitution in USSR) anything more than a propaganda tract? Did really Mao really guarantee the right to strike?

"By the way, the relative popularity of Mao and Deng in China today could be measured by observing the numbers at the memorial site where people can go and put virtual flowers to personalities they like: http://jidian.china.com Since 2009 and until July 8, 2010, Mao got over 2 million bouquets of flowers, Deng – only 33,000, less than Zhou Enlai (nearly 200,000"

This comparison is all to the advantage of Deng, the real father of present China economic success following his dismantling of the Maoist economic system. The popularity of Mao is the direct consequence of his personality cult. In this Mao’s popularity in China parallels Stalin’s popularity in Russia. Both of them certainly would have been dwarfed by the popularity that Hitler would have enjoyed in Germany had he, like Stalin and Mao, won the war instead of losing it.

"Well, I would stick to what I said – there was life before democracy, which emerged at a very late stage of human history."

Indeed, starvation too was endemic in great part of human history, as well as wars of aggression and conquest, widespread torture, intolerance, mass killing of people of different ethnicity, religion, political convictions. But this is not a reason why we should approve or condone all this, as well as ruthless dictatorshipa, such as Mao’s, or Stalin’s or Hitler’s, in the modern world.

As to the nature of the present economic and political system it is Popov who misses my point. My point is that the nature of the political and economic system of present day China can be assimilated to the different kinds of South East Asian authoritarian regimes which have thrived and led to prosperity their countries before post-Maoist China: politically authoritarian nationalistic regimes, economically mixed marked economies, with a lot of steering by the state. Certainly the economic system of present day China cannot be said to be a communist one, and it is much closer to the South East Asian authoritarian model than to the economic institutions of Maoist China.

"According to Maddison (2008), Chinese per-capita GDP was about 70 percent of India’s in 1950, rose to about 100 percent by 1958-59, fell during the Great Leap Forward, rose again to 100 percent of the Indian level by 1966, fell during the first years of the Cultural Revolution, and rose again to 100 percent by 1978."

This does not seem a great performance, owing to the fact that Mao inherited a country devastated by a long period of war and that the post-war performance of post-war India, before the recent liberalization away from the original Soviet-like model of concentration on heavy industry directed by the state was far from satisfactory.

"By 2006, it was more than twice the Indian per capita GDP."

Indeed this took place after the demolition of Mao’s economic institutions (starting with Mao’s communes) following Deng’s reforms. This is made quite evident from the graph relating to the comparison between India and China’s performances.

If we just look at economic performance during the Mao years, and GDP, then China's performance is more or less the equal of India's, or perhaps not quite as good.

However GDP is not the only story.

When it comes to life expectancy and literacy, by any measure, China dramatically outperformed India during the Maoist years. My own wife born in 1966, comes from a very poor village in rural Guandong. The whole family shared a bed in a single tiny room. The poverty was appalling. However in spite of this she had a happy childhood. She had free basic medical care (she still has her vaccination certificates), and received 10 years free basic education to the point where she is completely numerate and literate.

Literacy increased from under 20% in 1949 to 70 to 80% in 1976. In India literacy is even today only about 60% - compared to well over 90% in China now (half of Indian women cannot read or write).

Mao doubled life expectancy - the most dramatic increase in life expectancy in history happened under Mao, and I would like to bring to your attention a current Stanford study on this:http://tinyurl.com/2gycydx

In fact it is self evident. The fastest rate of population growth in China's history happened under Mao, with the population doubling. No one disputes this. Yet this happened during a time of falling fertility (refer work by Judith Banister). What then explains the population growth? The only explanation is a dramatic lowering of mortality.

In fact, in spite of starting off from similar conditions in the late 1940s, by 1976, the year of Mao's death, life expectancy in China was already higher than what it is in India today.http://tinyurl.com/2fuhovw

Furthermore another study (Harvard University) makes a compelling cast that China over the past 30 years has outperformed India because Maoist China prepared an excellent foundation of a healthy and literate (for a developing country of low GDP) population for Deng’s reforms to take place.

This is an excerpt from the article:

“However, the authors note, China’s economy has exploded, expanding by 8.1 percent per capita per year on average between 1980 and 2000, while in the same time period India saw a sustained growth rate in income per capita of 3.6 percent–a rate that, while rapid by the standards of most developing economies, is modest compared to China’s.

What accounts for the difference? Part of the answer, the HSPH team suggests, is that dramatic demographic changes in China began decades before those in India. After 1949, China’s Maoist government invested heavily in basic health care, creating communal village and township clinics for its huge rural population. That system produced enormous improvements in health: From 1952 to 1982, infant mortality in China dropped from 200 to 34 deaths per 1,000 live births. Life expectancy rose from 35 years to 68.”

Yet if we read not only what most academics and the media says in the West, but also what many Chinese government officials themselves say, one would believe that Mao's China was a complete unmitigated disaster in which nothing good happened. I would say the truth is not as simple as this.